KUALA LUMPUR, April 23 — DAP’s Lim Guan Eng has labelled the Perikatan Nasional administration’s plan to tap funds from the National Trust Fund (Kumpulan Amanah Wang Negara) irresponsible, incompetent, and a bid to escape Parliament scrutiny.
The former finance minister suggested the plan was akin to robbing the savings meant for future generations, forced by Prime Minister Tan Sri Muhyiddin Yassin’s poor budget planning.
“The PN government once again demonstrates its incompetence and irresponsibility in managing public finances,” Lim, MP for Bagan, said in a statement.
“This time they are using emergency powers to raid the National Trust Fund (Kumpulan Wang Amanah Negara or KWAN) to make up for the poor 2021 Budget planning,” he added.
“Prime Minister Muhyiddin Yassin had admitted that the government has run out of money but dipping into strategic cash reserves for our children and future investment has never been done by PH even during the toughest of times.”
KWAN was set up in 1988 to raise government savings and provide alternative financing for development expenditures. The fund had assets worth RM17.4 billion as of end-2018, according to the latest publicly available KWAN financial accounts.
Bank Negara Malaysia is the administrator of the fund while all contributions have so far come from the national oil company, Petronas.
Lim claimed the fund is already underinvested with assets far less than its younger counterparts in neighbouring countries, like Timor Leste’s. Tapping KWAN to fund more Covid-19 vaccines would further deplete its poor reserves, he added.
“Malaysia has been underinvesting in KWAN. The underinvestment is so severe that much younger similar funds are now larger than Malaysia’s,” he said.
“Established only in 2005, the Petroleum Fund of Timor Leste had assets worth approximately RM65 billion by 2018. Any raiding of KWAN will set back progress in building the fund.”
The government approved amendments to the National Trust Fund (KWAN) Act 1988 (Act 339) on Tuesday to allow money from the fund to procure vaccines and any expenditure incurred in relation to the vaccines.
Evoking the Emergency (National Trust Fund) (Amendment) Ordinance 2021 to make the amendment, the move has been met with strong opposition as critics raised concerns about the plan’s impact on future savings.
Lim said instead of “raiding” KWAN, the government should borrow money and raise its deficit level.
“This is particularly so when government borrowing rates in recent months have been the cheapest in history,” said the former finance minister.
Conventional 10-year Malaysian government bonds traded at a yield of 3.09 per cent as of April 21. They were 4.08 per cent in 2018, 3.31 per cent in 2019 and 2.65 per cent in 2020.
The government had allocated RM2.05 billion for vaccine purchases to cover 26.5 million people under the 2021 Budget, which would cover slightly over 80 per cent of total Malaysian population.
Lim said additional sum could easily be raised in the market cheaply with little impact on the deficit ratio.
“To illustrate, if the government were to raise an additional RM20 billion worth of bonds, this would raise the 2021 deficit-to-GDP ratio by only one percentage point from current level,” he said.
Official deficit ratio projection was a drop to 5.4 per cent of GDP from 6.2 per cent in 2020.
Lim said the government can afford the minor budget deficit increase during a difficult economic recession and will not be punished by the markets. Malaysia was the only South-east Asian nation to have its credit rating downgraded even though other countries had increased their borrowings, the former minister noted.
“By using the Emergency as a pretext to suspend Parliament to dispossess its democratic role of parliamentary oversight and scrutiny, the PN government has chosen an inferior fiscal solution to the vaccine procurement problem,” the DAP leader alleged.
